Brokers are helping people finance purchases for property sold at auction, according to the Essential Information Group
Figures from the Group, reported by BridgingAndCommerical.co.uk in March 2017, show that the number of properties bought at auction rose by 1.7% in the 12 months from February 2016 to January 2017. Property auctions appeal to many buyers because many sellers want a quick sale and are prepared to sell property at below market prices. Another advantage is that most properties sold at auction will not be part of a chain.
Auctions are about speed. It takes just a few minutes for a winning bid to be placed, and the completion of the sales can be made in a few weeks and can then be ready to be occupied. The downside of this speed is that finance can be tricky. Within 24 hours of a winning bid being received, a 10% deposit needs to be paid and the remaining 90% is due within 28 working days.
For developers and landlords, securing a commercial mortgage can often take longer than 28 days, and the same is true for a private individual applying for a standard mortgage. This is where brokers help.
If a developer wants to buy cheap property, carry out some refurbishment work and then sell at a profit, a broker can arrange a bridging loan to purchase and refurbish the property. A landlord buying to let, or an individual buying property, can use a broker to obtain a bridging loan to complete the sale, and at the same time arrange a long-term commercial or standard mortgage for the property.